Its shares fell more than 7 percent in early trading.
Walgreen, which has more than 7,800 U.S. drugstores, on Wednesday reiterated that is does not plan to renew its contract with Express Scripts, which is set to expire on December 31.
The chain remains open to any fair and competitive offer from the PBM.
But Chief Executive Greg Wasson told analysts on a conference call that he made a serious attempt to reach an agreement last week and Express Scripts' response was not meaningful.
We're moving on, Wasson said.
If the contract does expire as planned, patients who fill Express Scripts prescriptions at Walgreens stores will have to go elsewhere, cutting into Walgreen's sales.
Walgreen estimated that it will have 97 percent to 99 percent of last year's prescription volume in fiscal 2012, assuming it does not resolve its impasse with Express Scripts.
But seeking to downplay the potential impact of the dispute on its business, Walgreen said that more than 100 health plans, employers and various Express Scripts clients told it they have either had changed PBMs or made sure patients would still have access to Walgreens pharmacies in 2012.
Walgreen said the decision to part ways with Express Scripts cost it a penny per share in comparable pharmacy sales in the first quarter, and 1 cent per share in expenses.
Walgreen earned $554 million, or 63 cents per share, in the fiscal first quarter that ended on November 30, compared with a profit of $580 million, or 62 cents per share, a year earlier.
Analysts were expecting 67 cents per share, according to I/B/E/S.
As of November 30, Walgreen had given 5 million flu shots this season, down from 5.6 million last year at the same time.
Sales rose 4.7 percent to $18.16 billion, the company said in early December. Sales at stores open at least a year, or same-store sales, rose 2.5 percent. Prescription sales, which make up nearly two-thirds of business, rose 2.6 percent at drugstores open at least a year.
Its shares fell $2.46, or 7.3 percent, to $31.01 in early New York Stock Exchange trading.
(Reporting By Phil Wahba in New York and Jessica Wohl in Chicago; Editing by Maureen Bavdek)